Watch video: Is consolidation the best solution to your credit card debt problem?
credit card consolidation
7 Tips on credit card consolidation
- 1Lead a frugal lifestyle
- 2Make timely bill payments
- 3Select the best way to consolidate bills
- 4Track your payments
- 5Create an emergency fund
- 6Don’t incur new debts
- 7Follow a stringent budget
Credit card consolidation – How does it help you?
Credit card debt consolidation helps you pay your bills through affordable monthly payments. It leaves you with only a single financial obligation instead of multiple bills. The biggest benefit of credit card consolidation is the fact that it helps you lower your interest rates and monthly payments.
How does the credit card debt consolidation process work?
Credit card consolidation helps to restructure your repayment plan. This process helps to consolidate credit card debt into a single monthly payment plan. You have to make one monthly payment instead of handling several creditors. However, the payment amount basically depends upon your total outstanding balance, current interest rate, income, and the creditors.
You can typically consolidate credit card through 3 ways –
- Credit card consolidation program
- Do it yourself credit card consolidation
- Credit card consolidation loan
Find out how you can pay back your creditors through these 3 ways.
Is credit card consolidation the right option for you?
Check out the few factors which you must consider before opting for this credit card debt eliminate option.
- Regular income: Be it credit card debt management or consolidation or settlement, you can't fulfill your financial commitment without having a regular income. Keep it in mind that you won't be able to eliminate your credit card debt through consolidation. All you can do is pay back your creditors at a reduced rate. You have to pay off the debt and so a steady flow of income is extremely essential. If you can't make the monthly payments, then this debt relief option won't be able to help you out.
- Interest rates: As it has already been mentioned, the biggest benefit of consolidating credit card debt is the massive interest rate reduction. Lower interest rates allows you get back on the right financial path quickly. However, if the interest rate is not substantially reduced, then there is no point in paying the additional fees for consolidating credit card debts.
- Repayment term: Credit card consolidation allows you to lower your monthly payments. Sometimes, your monthly payment amount is significantly reduced in exchange of a longer repayment term. In such a situation, you may end up spending more than what you've actually calculated. Moreover, it'll take a longer period of time to get debt free.
Apart from the above mentioned factors, there are a few tips which you much follow in order to make credit card debt consolidation the right option for you. Here are a few tips on credit card consolidation which you must never miss out.
You can get financial freedom by consolidating your debts. However, you need to follow a strict financial regimen in order to repay your debts. The above mentioned tips will help you start a fresh financial life sooner.
Credit card consolidation vs settlement – What are the differences?
The basic difference between the credit card debt consolidation and credit card debt settlement is about the repayment strategy. In credit card debt consolidation or credit card debt management, you're basically able to reduce your interest rates and number of creditors. You're making only a single monthly payment. However, a credit card debt settlement program helps to reduce the principal amount.
In credit card debt settlement, you're able to solve your financial problems through a lump sum payment. On the other hand, credit card consolidation facilitates a single monthly repayment plan for you. It is not required to handle multiple unsecured debts any more.
Another difference is that in credit card management or consolidation, you attend a free counseling session wherein the counselor makes a detailed analysis of your income versus debt obligation. In settlement program, a trust account is created for you wherein you're required to save a certain amount every month.
|Credit card consolidation||Credit card settlement|
|Reduction in principal amount||No||Yes|
|Reduction in interest rate||Yes||No|
|Lump sum payment||No||Yes|
|Single monthly payment||Yes||No|
|Minimum debt amount||No limit||Yes|
|Effect on credit report||"Paid in Full"||"Paid as Agreed"|
Last updated on 2013-11-08
DebtCC Wiki: Find out how to manage credit card debt
According to the Bureau of Labour Statistics, in U.S, workers were paid a fair amount of money per week in the year ending of 2012. There was a 4.7% increase in wage from 2011. However, the overall statistics says ,wages have been falling since 2012. This situation has forced the low paid workers to get into poverty.According to EPI (Economic Policy Institute) report, workers are suffering for the poor wage distribution. In recent times, two county (Manhattan and Los Angeles County) witnessed severe fal...Posted by good.nelly on Jun,26 2014
The federal agency, working under the U.S Department of Agriculture (USDA), Centre for Nutrition Policy and Promotion (CNPP) had released a report titled, “The Consumer Economic Perspective” that delved into a serious household concern, “can people spend less, yet get access to healthy food, always? ”. The highlights of the research report is as follows: USDA has formally introduced four kinds of food plan, namely - Thrifty, Low-Cost, Moderate-Cost and Liberal that provide a clear picture o...Posted by philbradford91 on May,12 2014
Easter is knocking at the door once again. The vibrant candy-filled baskets, egg-dyeing and Easter egg hunts, and so on is like a dream come true for every child. However, the same can be equally nightmarish for the parents who are surviving on a tight budget. Adding insult to injury is the gradually soaring store prices, thereby making it burdensome to purchase those costly gifts. Still, you can do a lot in a budget-friendly way, provided you can implement the Easter money saving tips discussed here ...Posted by philbradford91 on Mar,25 2014
With regards to your personal finances, 2014 might offer you the best chance to leverage the low interest rates and get out of debt as soon as possible. Since the economic catastrophe in 2008, the Federal Reserve has made continuous monthly bond purchases in order to keep interest rates exceptionally low and boost consumer borrowing and spending. With the US economy refurbishing itself, the Fed is gradually pulling back on its bond purchases (tapering). In anticipation of this decision of the Fed, the lon...Posted by amy.nickson1986 on Feb,11 2014
DebtCC Answers: Get expert advice on how to pay off credit card debts
Community Discussions on Debt Consolidation
Settling your debts requires grit and planning. This is because you’ll have to speak to your creditors all by yourself to convey your financial troubles and make them see reason. Besides that you al...
How to repair your bad credit in simple and easy steps Have you gone through some serious credit troubles in the past? Do you want to make a fresh financial start since lenders are not interested to ...
What is debt settlement and how does it work? Debt settlement basically refers to the process wherein creditors accept a fraction of the total outstanding balance from the debtors. The settlement a...
True, the path to credit repair is always full of trials and tribulations, not to say of ignorance and misconceptions. To get a better credit score, you may have to fix past financial problems, deve...
Different types of credit accounts Understanding different types of credit accounts (especially the ones that are opened during a marriage) can help you sneak a peep into the possible pros and cons. ...